Not quite. Net income could be small due to paying nz drivers so the taxable amount may only be 7m. 1m taxes off of 7m seems higher.
Also shifting income to another jurisdiction is considered “good management” by management. I hate it, but the rule is “if you can explain solid business logic in front of a judge with a straight face then the judge can’t find issue with it”. The law may be different in nz.
Most parent companies in the usa have hq in the tiny state of Delaware and massive “rent” payments from the “subsidiaries that do all the actual business” to the parent. Many states get into agreements for waste management to be taken over by a private company and all profits go to the local government… and the local subsidiary never turns a “profit”. Sigh …
I guess if you can make up numbers about profits then it might make sense.
It’s more likely tax evasion as you described. That’s on us. We are too fucking stupid to prevent this kind of tax evasion. Well maybe not stupid, just corrupt as shit because they grease the palms of the parties and politicians to make sure they don’t get taxes properly.
It’s “tax evasion” in the sense that it’s a company using tax laws to minimise the amount of tax they pay, just like how you and I do when we do our taxes. The differences are it’s much easier to do for multinational corporations due to tax laws, And due to them being able to pay lots of accountants lots of money to find every way possible.
There are a multitude of good and reasonable reasons why it’s possible. You can’t make companies pay tax on revenue because that would instantly throw 90% of companies into bankruptcy. You can’t stop companies from paying licensing fees etc to their parent company and writing it off as a business cost, because that would destroy all franchise stores etc.
The tax “loopholes” exist for a legitimate reason, so companies structure themselves so they can take advantage of them. Getting rid of them would hurt the companies that need them more than the companies that “abuse” them.
There are a multitude of good and reasonable reasons why it’s possible. You can’t make companies pay tax on revenue because that would instantly throw 90% of companies into bankruptcy.
I see people say this all the time but it makes no sense. I pay taxes on revenue and so do you. We don’t get to deduct all our expenses from our salaries right?
How come every single person in the country isn’t bankrupt if paying taxes on revenue leads to bankruptcy?
You can’t stop companies from paying licensing fees etc to their parent company and writing it off as a business cost, because that would destroy all franchise stores etc.
Yea so?
The tax “loopholes” exist for a legitimate reason, so companies structure themselves so they can take advantage of them. Getting rid of them would hurt the companies that need them more than the companies that “abuse” them.
I disagree. Companies exist in countries where these types of things are not permitted.
I see people say this all the time but it makes no sense. I pay taxes on revenue and so do you. We don’t get to deduct all our expenses from our salaries right?
Personal Income tax is not the same as taxes that businesses pay. You can make tax deductions too, and you can do salary sacrificing and many other things to reduce your income tax as well.
If you made companies pay tax on revenue, pretty much every company in the entire world would close instantly.
Yea so?
So you think franchises shouldn’t exist?
Companies exist in countries where these types of things are not permitted.
Example please? Which companies in which countries are doing tax things that aren’t permitted?
Personal Income tax is not the same as taxes that businesses pay.
I know. That’s what I said. We pay taxes on revenue and business pay taxes on profits. They get to deduct all their expenses and we don’t.
You can make tax deductions too, and you can do salary sacrificing and many other things to reduce your income tax as well.
I can make some deductions but I can’t deduct all my expenses like a business does. If I was to deduct all my expenses like a business does I would indeed reduce my income taxes drastically.
If you made companies pay tax on revenue, pretty much every company in the entire world would close instantly.
Again if this is true why isn’t every person in the world bankrupt because they pay taxes on revenue?
So you think franchises shouldn’t exist?
Wouldn’t bother me at all.
Example please? Which companies in which countries are doing tax things that aren’t permitted?
I don’t understand why you decided to be so dishonest all of a sudden. Why did you go to “doing tax things”. When did I say there were countries where businesses didn’t “do tax things”?
Not quite. Net income could be small due to paying nz drivers so the taxable amount may only be 7m. 1m taxes off of 7m seems higher.
Also shifting income to another jurisdiction is considered “good management” by management. I hate it, but the rule is “if you can explain solid business logic in front of a judge with a straight face then the judge can’t find issue with it”. The law may be different in nz.
Most parent companies in the usa have hq in the tiny state of Delaware and massive “rent” payments from the “subsidiaries that do all the actual business” to the parent. Many states get into agreements for waste management to be taken over by a private company and all profits go to the local government… and the local subsidiary never turns a “profit”. Sigh …
I guess if you can make up numbers about profits then it might make sense.
It’s more likely tax evasion as you described. That’s on us. We are too fucking stupid to prevent this kind of tax evasion. Well maybe not stupid, just corrupt as shit because they grease the palms of the parties and politicians to make sure they don’t get taxes properly.
It’s “tax evasion” in the sense that it’s a company using tax laws to minimise the amount of tax they pay, just like how you and I do when we do our taxes. The differences are it’s much easier to do for multinational corporations due to tax laws, And due to them being able to pay lots of accountants lots of money to find every way possible.
Why is any of that even possible? Because we wrote the tax laws to make it possible.
There are a multitude of good and reasonable reasons why it’s possible. You can’t make companies pay tax on revenue because that would instantly throw 90% of companies into bankruptcy. You can’t stop companies from paying licensing fees etc to their parent company and writing it off as a business cost, because that would destroy all franchise stores etc.
The tax “loopholes” exist for a legitimate reason, so companies structure themselves so they can take advantage of them. Getting rid of them would hurt the companies that need them more than the companies that “abuse” them.
I see people say this all the time but it makes no sense. I pay taxes on revenue and so do you. We don’t get to deduct all our expenses from our salaries right?
How come every single person in the country isn’t bankrupt if paying taxes on revenue leads to bankruptcy?
Yea so?
I disagree. Companies exist in countries where these types of things are not permitted.
Personal Income tax is not the same as taxes that businesses pay. You can make tax deductions too, and you can do salary sacrificing and many other things to reduce your income tax as well.
If you made companies pay tax on revenue, pretty much every company in the entire world would close instantly.
So you think franchises shouldn’t exist?
Example please? Which companies in which countries are doing tax things that aren’t permitted?
I know. That’s what I said. We pay taxes on revenue and business pay taxes on profits. They get to deduct all their expenses and we don’t.
I can make some deductions but I can’t deduct all my expenses like a business does. If I was to deduct all my expenses like a business does I would indeed reduce my income taxes drastically.
Again if this is true why isn’t every person in the world bankrupt because they pay taxes on revenue?
Wouldn’t bother me at all.
I don’t understand why you decided to be so dishonest all of a sudden. Why did you go to “doing tax things”. When did I say there were countries where businesses didn’t “do tax things”?
Your income is not revenue.
Businesses only get to deduct business related expenses, the same way you and I get to deduct income-earning related expenses.